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Other Budget Issues

Last Updated: 5/20/2010
Budget Issue: Increases in Copayments.
Program: Healthy Families Program
Finding or Recommendation: Consider similar proposals in Healthy Families Program (HFP) and Medi-Cal in tandem and make copayments for the lowest-income HFP families consistent with those in Medi-Cal, consider adopting reduced levels of copayments, and consider making clarifying changes to proposed trailer bill language.
Further Detail

Governor's Proposal. The Governor’s May Revision proposes the following new cost-sharing increases in the HFP:

  • Beginning February 2011, $50 copayments would be charged for Emergency Room (ER) use that does not result in a patient being hospitalized or being held for outpatient observation (for $2.5 million in General Fund savings), and
  • Beginning February 2011, $100 copayment per hospital inpatient day would be charged (maximum $200 per admission) (for $712,000 in General Fund savings). 

The copayment proposals mirror similar proposals for the Medi-Cal program.  (In addition, the administration proposes $50 copayments for emergency use of the ER for Medi-Cal enrollees— there is no similar proposal for HFP enrollees.)  Currently, HFP has copayments of $15 for ER use that does not result in hospitalization, and has no copayment for hospital services (except for $5 copayments for visits related to physical, occupational and speech therapy).  Generally, HFP has a two-tiered copayment structure for most services that specifies lower copayments for families under 150 percent of the FPL.

In addition, the administration proposes trailer bill language that would require prior federal approval before copayments could be implemented.  The trailer bill also specifies that the copayments in HFP could not be established unless copayments of the same amount are established in Medi-Cal.

Analyst’s Comment. We believe instituting a larger copayment for non-emergency use of the ER has the potential to reduce unnecessary utilization and reduce state costs.  However, the trailer bill language does not clearly define non-emergency use.  

Moreover, some of the proposed copayment amounts may be excessive for low-income populations needing these services.  The Legislature may wish to consider imposing lower copayments than those proposed by the administration. 

Analyst’s Recommendation.  First, we recommend the Legislature consider the copayment proposals in HFP in tandem with those in Medi-Cal, and to make decisions that ensure policy consistency between the two programs.  Specifically, we recommend that the Legislature adopt similar levels of copayments for families below 150 percent of the FPL as any it chooses to adopt for the Medi-Cal population.  For families over 150 percent of the FPL, it may wish to consider slightly higher levels of copayments than any it chooses to adopt for the Medi-Cal population. 

We also recommend the Legislature consider adopting lower copayment amounts than those proposed for non-emergency use of the ER, of up to $25 for families under 150 percent of the FPL, and up to $50 for families over 150 percent of the FPL.  Likewise, for the same reason, the Legislature may wish to consider imposing more modest copayments on inpatient services, such as $50 to $100 for each hospitalization of any length involving at least one overnight stay. These alternatives would result in a lower level of savings than the administration's proposal.

Finally, we recommend that the Administration report at budget hearings on under what circumstances a copayment would be charged for ER visits under the proposed trailer bill language.  The Legislature may wish to clarify the trailer bill language to ensure that it meets the policy goals of discouraging non-emergency use of the ER. We are still reviewing the other trailer bill language provisions.